HUD Updates Demolition and Disposition Notice

Earlier today, HUD published PIH 2021-07, titled “Demolition and/or disposition of public housing property, eligibility for tenant-protection vouchers, and associated requirements.” This notice updates PIH 2018-04, which was the prior demolition and disposition notice.

The new notice makes several non-substantive and substantive revisions to the prior notice. Non-substantive revisions include clarifying headings, adding spacing between paragraphs, re-numbering paragraphs, and correcting citations to regulatory provisions, which make for a clearer document. Substantive changes in this notice include the following:

• HUD’s Special Applications Center (SAC) no longer claims to return a SAC application that is substantially incomplete or deficient, while informing a PHA of its deficiencies (previously, SAC would “return” the application by changing the status of the application to DRAFT in the Inventory Management System/PIH Information Center [IMS/PIC]);
• The Department clarifies that PHAs must not just make resident consultation accessible, but rather that “PHAs must ensure that communications and materials are accessible to individuals with disabilities and take reasonable steps to provide meaningful access to persons with Limited English Proficiency (LEP)”;
• Use of proceeds is no longer a material term of the SAC application, so if a PHA’s plan on the use of proceeds changes after HUD approval of an application, a PHA would no longer have to request an amendment to the application;
• Includes new RAD/Section 18 blends;
  • RAD/Section 18 Construction Blend – the percentage of units eligible for disposition is based on hard construction costs for new construction or rehabilitation of the covered project. Transactions that use the 9 percent Low-Income Housing Tax Credit are not eligible.
    • If hard construction costs equal 90 percent of the Housing Construction Costs (HCC) as published by HUD for a given market area, the PHA may dispose of up to 60 percent of the units of the converting project under Section 18;
      • For high-cost areas (HCC exceeds 120 percent of the national average), a PHA may dispose of up to 80 percent of the units of the converting project under Section 18;
    • If the hard construction costs equal or exceed 60 percent, but are less than 90 percent, of HCC, the a PHA may dispose of up to 40 percent of the units of the converting project under Section 18;
    • If the hard construction costs equal or exceed 30 percent, but are less than 60 percent, of HCC the PHA may dispose of up to 20 percent of the units of the converting project under Section 18;
  • RAD/Section 18 Small PHA Blend – for any PHA with 250 or fewer public housing units under its Annual Contributions Contract (ACC), up to 80 percent of the units in a converting project may be disposed of under Section 18;
• The Department clarifies that tenant-protection voucher (TPV) requests first go to the field office for a threshold review before being sent to HUD’s Financial Management Division (FMD), while HUD’s Financial Management Center (FMC) notifies PHAs of the final TPV awards.

The full notice can be found here.